February 2016 RIU Conference - Fremantle · 2018-12-14 · February 2016 RIU Conference -...

February 2016

RIU Conference - Fremantle

Heron Resources Limited 2ASX: HRR TSX: HER

CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATIONThis news release contains forward-looking statements and forward-looking information within the meaning of applicable Canadian securities laws, which are based on expectations, estimates and projections as of the date of this news release. This forward-looking information includes, or may be based upon, without limitation, estimates, forecasts and statements as to management’s expectations with respect to, among other things, the timing and amount of funding required to execute the Company’s exploration, development and business plans, capital and exploration expenditures, the effect on the Company of any changes to existing legislation or policy, government regulation of mining operations, the length of time required to obtain permits, certifications and approvals, the success of exploration, development and mining activities, the geology of the Company’s properties, environmental risks, the availability of labour, the focus of the Company in the future, demand and market outlook for precious metals and the prices thereof, progress in development of mineral properties, the Company’s ability to raise funding privately or on a public market in the future, the Company’s future growth, results of operations, performance, and business prospects and opportunities. Wherever possible, words such as “anticipate”, “believe”, “expect”, “intend”, “may” and similar expressions have been used to identify such forward-looking information. Forward-looking information is based on the opinions and estimates of management at the date the information is given, and on information available to management at such time. Forward-looking information involves significant risks, uncertainties, assumptions and other factors that could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking information. These factors, including, but not limited to, fluctuations in currency markets, fluctuations in commodity prices, the ability of the Company to access sufficient capital on favourable terms or at all, changes in national and local government legislation, taxation, controls, regulations, political or economic developments in Canada, Australia or other countries in which the Company does business or may carry on business in the future, operational or technical difficulties in connection with exploration or development activities, employee relations, the speculative nature of mineral exploration and development, obtaining necessary licenses and permits, diminishing quantities and grades of mineral reserves, contests over title to properties, especially title to undeveloped properties, the inherent risks involved in the exploration and development of mineral properties, the uncertainties involved in interpreting drill results and other geological data, environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins and flooding, limitations of insurance coverage and the possibility of project cost overruns or unanticipated costs and expenses, and should be considered carefully. Many of these uncertainties and contingencies can affect the Company’s actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, the Company. Prospective investors should not place undue reliance on any forward-looking information. Although the forward-looking information contained in this news release is based upon what management believes, or believed at the time, to be reasonable assumptions, the Company cannot assure prospective purchasers that actual results will be consistent with such forward-looking information, as there may be other factors that cause results not to be as anticipated, estimated or intended, and neither the Company nor any other person assumes responsibility for the accuracy and completeness of any such forward-looking information. The Company does not undertake, and assumes no obligation, to update or revise any such forward-looking statements or forward-looking information contained herein to reflect new events or circumstances, except as may be required by law.

No stock exchange, regulation services provider, securities commission or other regulatory authority has approved or disapproved the information contained in this news release.

Compliance Statement (JORC 2012 and NI43-101)

This Report incorporates by reference the complete ASX announcement relating to the PEA results which were released to the market on 22 April 2015 and is entitled “Preliminary Economic Assessment Delivers Strong Business Case for the Woodlawn Zinc-Copper Project” (“PEA Announcement”). The PEA Announcement is available from the Company’s website at www.heronresources.com.au or from the ASX or SEDAR, and contains the JORC Table 1 relating to the Underground Mineral Resources as well as the detailed technical and financial assumptions which underpin the PEA results.

The technical information in this release relating to the exploration results and forward program at the Woodlawn Project is based on information compiled by Mr David von Perger, who is a Member of the Australian Institute of Mining and Metallurgy (Chartered Professional – Geology). Mr von Perger is a full time employee of Heron Resources Limited and has sufficient experience, which is relevant to the style of mineralization and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the JORC Code (2012 edition) and “qualified person” as this term is defined in Canadian National Instrument 43-101 (“NI 43-101”). Mr von Perger has reviewed and approved the technical information this report.

The zinc equivalent ZnEq calculation takes into account, mining costs, milling costs, recoveries, payability (including transport and refining charges) and metal prices in generating a Zinc equivalent value for each block grade for Au, Ag, Cu, Pb and Zn. ZnEq = Zn%+Cu%*3.12+Pb%*0.81+*Au g/t*0.86+Ag g/t*0.03

Metal prices used in the calculation are: Zn US$2,300/t, Pb US$ 2,050/t, Cu US$6,600/t, Au US$1,250/oz and Ag US$18/oz. It is Heron’s view that all the metals within this formula are expected to be recovered and sold.


Markets ASX:HRR & TSX:HER

Cash A$23.8M (31 Dec 2015)

Listed Investments A$ 3.1M (31 Dec 2015)

Project Portfolio

• Woodlawn Zinc-Copper Project – advanced high grade Zn, Cu polymetallic Resource

• Kalgoorlie Nickel Project – substantial Ni Resource, development strategy through project partnering

• NSW Exploration – quality earlier stage base and precious metal properties

• WA Exploration – quality Ni sulphide properties

Heron ResourcesThe Introduction

Heron is focused on the near term development of the high grade Woodlawn Zinc-Copper Project


Woodlawn Zinc-Copper Project

• High grade Zn+Cu+Pb+Ag+Au - high value deposit

• One of the few near-term production projects

• Compelling fundamentals

• A clear pathway to production

• Fully funded through Feasibility Study

• Granted mining lease & project approvals

• Unrivalled infrastructure

• A clear cut value proposition

Woodlawn Project Overview

High grade and high value deposit


Corporate Summary

ASX:HRR | TSX:HER

Capital Structure

Shares: 415 million

Options: 33 million

Share Price: $0.10

Market Capitalisation: $42 million

Cash: $23.8 million (31 Dec 2015)

Listed Investments: $3.1 million

Board

Chairman Stephen Dennis

Non-Executive Director Borden Putnam III

Non-Executive Director Fiona Robertson

Non-Executive Director Mark Sawyer

Executive Director Ian Buchhorn

Managing Dir & CEO Wayne Taylor

Management

Managing Director & CEO Wayne Taylor

Executive Director Ian Buchhorn

Chief Operating Officer Andrew Lawry

General Manager Exploration Dave von Perger

General Manager Strategy Charlie Kempson

General Manager Finance Simon Smith

Share Price Share Register

11%9%

13%

13%

54%

Ian Buchhorn

Sprott

Greenstone

Canadian Register

Australian Register


Zinc Market

Compelling Fundamentals

(,00

0) t

on

nes

$/lb

Source: Terra Studio, Feb-16

• Current pricing environment is

unsustainable for zinc production

• Mine closures and curtailment creating

global supply shortage

• Few near term production projects

• Consumption remains strong – Jan-Dec

2015 > 20141

• Falling warehouse stocks – ILZSG

forecast metal deficit of 152kt in 2016

prior to Glencore’s announcement to

reduce production by 500ktpa

• Average production grades are falling

Strong price outlook from major

commodity forecasters


Zinc Market

Latest News

Citi Research (Feb 2016)Price related zinc production cuts 2015/16 ~5% (635kt)

Negative C1 margins for ~16% of global zinc production (~26% incl. sustaining capex)

Depleted mines add to supply contraction tally

Consolidated price+depletion+additions view – 2016 mine supply down by 700kt to 13Mt

Closures & Curtailments - Delayed ImpactGlencore – 500-550ktpa curtailment announced 9 Oct ’15

Nyrstar – 50ktpa closure + 50ktpa curtailment announced 7 Dec ‘15

MMG – Century – 500ktpa closure – last shipment 7 Dec ‘15

Vedanta – Lisheen – 160ktpa closure – last shipment 21 Jan ‘16

Positive Leading Indicator – Tightening Supply SideZinc concentrates treatment charges falling - Dec ‘15 $150 - $170/t Feb ‘16 $130 - $150/t1

1 Macquarie 4/2/16

Yet to see impact on refined metal market


Woodlawn Project Site

Image circa 1997Operations 1978 – 1998

Processed 13.8Mt @ 9.1% Zn, 3.6% Pb,1.6% Cu, 0.5g/t Au, 74g/t Ag

Process plant removed 1999


Woodlawn – a High Grade DepositA Compelling Peer Comparison

“WUP” – Woodlawn Underground Project“WRP” – Woodlawn Tailings Retreatment Project

Source:

• (HRR-WUP) - The new 6.5Mt WUP Resource compares extremely well to global peers (HRR-WUP)

• (HRR-WRP) - The WRP Resource grade of ~6% ZnEq is above some greenfields peers.


Delivering – Pathway to Production

12 Months Feasibility Study (FS)

18 Months Decision to Mine Project FundingConstructionCommissioning

• Delivered robust business case

• On-time, on-budget

• Multiple high grade extensions

• Significant new shallow Resource

• New mine plan

• Successful metallurgical testwork

• Single plant WUP + WRP

8 Months PEA Finalised

• $11M FS budget

• Fully funded

• Tracking to plan

• New strategic partner Greenstone Resources LP announced 24 July 2015

• FS completion Q2 2016

• Independent Technical Expert reviewing FS in prep for funding

• Active discussions with potential funding parties

• Seeking EOI’s for construction

• Project construction (12-18 months)

• First production target - early 2018

MergerHRR + TRO

• Merger completed Aug 2014

• Woodlawn PEA drilling commenced Sep 2014

“PEA” – Preliminary Economic Assessment“WUP” – Woodlawn Underground Project“WRP” – Woodlawn Tailings Retreatment Project


Woodlawn Feasibility StudyProject Status

65%COMPLETE

Phase II Drilling

Tailings Resource & Reserves

UG Resource & Reserves

Mine Planning

Metallurgical Testwork

Plant Engineering & Design

Infrastructure, Transport & Logistics

Study Delivery

Q2 2016


2014 & 2015 Drilling At Woodlawn

Assays (2014/2015) >20% ZnEqKate Lens:14.4m @ 20.7% ZnEq from 374m (4.6% Zn, 4.1% Cu, 0.8% Pb, 1.0g/t Au, 57g/t Ag), WNDD0001

8.8m @ 30.1% ZnEq from 374m (12.6% Zn, 1.6% Cu, 7.5% Pb, 2.3g/t Au, 152g/t Ag), WNDD0002







3.9m @ 26.9% ZnEq from 408m (8.5% Cu, 0.1g/t Au, 8.9g/t Ag), WNDD0053

9.1m @ 31.6% ZnEq from 370m (18.3% Zn, 2.3% Cu, 4.6% Pb, 1.1g/t Au, 53.7g/t Ag), WNDD0073

Lisa Lens:4.2m @ 28.5% ZnEq from 242m (17.7% Zn, 1.6% Cu, 5.0% Pb, 1.1g/t Au, 28g/t Ag), WNDD0015

12.4m @ 20.0% ZnEq from 222m (12% Zn, 1.6% Cu, 2.0% Pb, 0.7g/t Au, 23g/t Ag), WNDD0104

G Lens:9.3m @ 20.5% ZnEq from 76m (5.2% Zn, 2.6% Cu, 2.3% Pb, 2.0g/t Au, 122g/t Ag), WNDD0013




4.2m @ 36.9% ZnEq from 66m (18.7%Zn, 1.7% Cu, 9.9% Pb, 1.0g/t Au, 131g/t Ag), WNDD0064


I Lens:5.7m @ 21.8% ZnEq from 626m (13.3% Zn, 0.7% Cu, 5.4% Pb, 1.2g/t Au, 26g/t Ag), WNDD0006

H Lens:1.7m @ 38.5% ZnEq from 109m (3.5% Zn, 6.8% Cu, 4.9% Pb, 3.9g/t Au, 213g/t Ag), WNDD0026


1.1m @ 52.0% ZnEq from 117m (24% Zn, 4.3% Cu, 12.9% Pb, 1.5g/t Au, 97g/t Ag), WNDD0044

2.5m @ 45.3% ZnEq from 93m (7.1% Cu, 4.5g/t Au, 626g/t Ag) WNDD0103

E Lens:4.2m @ 28.5% ZnEq from 135m (14.8% Zn, 2.2% Cu, 6.2% Pb, 0.7g/t Au, 37g/t Ag), WNDD0012

4.6m @ 47.2% ZnEq from 55m (24.4% Zn,1.1% Cu, 13.6% Pb, 1.4g/t Au, 241g/t Ag), WNDD0078

3.0m @ 58.7% ZnEq from 64m (28.5% Zn, 2.1% Cu, 13.1% Pb, 2.2g/t Au, 372g/t Ag), WNDD0078Refer to Slide 2 for ZnEq calculation


Underground Mine PlanningA ‘New’ Mine

Source: SRK

PEA Target

• Sufficient inventory to support

underground operations “UG

Starter Case”

PEA Outcomes

• 80% of WUP plant feed estimate

from new resources

• Mine depth extension limited to

80m

• WUP + WRP = 11 year mine life

Feasibility Target

• Sufficient Reserves to support

funding structure


Process Plant DesignDual-Feed Treatment

WRP

To 1.5Mtpa

WUP

To 0.7Mtpa

Zn metal in concentrate

Annual Production Target

51ktpa Zn(112Mlb)

Cu metal in concentrate


10ktpa Cu(22Mlb)+ Ag +Au

Pb metal in concentrate


16ktpa Pb(35Mlb)+Ag +Au

Source (Production Target):

Heron Preliminary Economic Assessment (PEA) - “Steady State”1.5Mtpa throughput capacity

“WUP” – Woodlawn Underground Project“WRP” – Woodlawn Tailings Retreatment Project


Woodlawn Infrastructure Advantages

#1 NSW State Grid350m

#3 Veolia Gas Generation

7 MW Installed – 450m#2 Infigen Wind Farm

23x2.1 MW Installed – 1500m

Plant Site

POWER

Population >430,000 within 50-55km

ACCESS

POWER

LABOUR yPORT

WATER PERMITTING

MINING LEASE

COMMUNITY

PEOPLE

100km

#1 Port Kembla

211 km by Road (Rail option)

Underutilised Conc Berth

$5M Shed Expansion 2013

#2 Port Botany

Alternative to Port

Kembla

239 km by Road

Rail option

PORT

• Extensive stakeholder consultation

through EA process

• Strong local community and

government support

• Single immediate landowner –

Veolia

• Agreements in place to purchase

land over operational footprint

• On-site collaboration – Veolia

State Government Project

Approval – July 2013

Mining Lease – SML20

renewed for 15 Years –

Nov 2029

Mine Operations Plan (MOP)

Approved – Nov 2015


Woodlawn Discovery Potential

In Mine:-Demonstrated discovery potential

• Kate Lens >0.5Mt• Lisa Lens

Lens extensions• Little drilling below operational depth (c. 620m)• Western lenses not tested to operational depths

New lens discoveries• Logical structural positions untested• Isolated massive sulphide intercepts to follow-up


Woodlawn Regional Exploration

A Quality Massive Sulphide District

Dominant Regional Position

• 632 km2 under tenure

• Coverage of VMS host rocks

Confirmed Prospectivity - Satellite Production

• Currawang Mine

• Cowley Hills Mine

Prospect & Target Generation

• New & historic remote sensing datasets

• Geochem anomalies

• Extensive areas under cover

• Limited systematic exploration for >30 yrs


Attractive cash position,

A clear route to market, and

Trading at a significant discount to peers

Cash and Equivalents at 31 Dec 2015

Cash $23.8M

Listed Investments $3.1M

Total $26.9M

Well Capitalised but Undervalued Relative to Peers

Positioned for uptick in EV as project progresses

Early MoverGreenstone Resources

LLP – Aug’15 A$6.8M

placement with Heron at premium to market + potential

additional investment + strategic relationship

Independent Broker Research Available From:


Heron Investment Proposition

ASX : HRR TSX : HER

Zinc – strong and transparent market

High grade / low risk / long life asset

PEA – delivered compelling development case

Feasibility Study well advanced

Short lead time to production

Demonstrated discovery upside

Favourable jurisdiction supported by excellent infrastructure

Well capitalised and fully funded through Feasibility Study

Strategic investor backing, a “value” stock

Heron Resources Limited 20Heron Resources Limited

REGISTERED OFFICE:1/37 Ord Street

West Perth WA 6005T: +61 8 6500 9200

SYDNEY OFFICE:Suite 702/191 Clarence Street

Sydney NSW 2000T: +61 2 9119 8111

Wayne Taylor (Managing Director)Ian Buchhorn (Executive Director)

[email protected]

Contacts

ASX : HRR TSX : HER

February 2016 RIU Conference - Fremantle · 2018-12-14 · February 2016 RIU Conference -...

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